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Kaminsky's Call: The Gap Stock, Out of Fashion?

Who wants to shop at The Gap now?

Shares tumbled yesterday after the retailer stunned investors with disappointing store sales for June.

Gap
CNBC.com
Gap

The question facing investors now? Were The Gap's disappointing numbers a one-time occurrence (and maybe a buying opportunity), or the start of a disturbing trend?

My "Call-to-Action" is to be cautious on this one. Both the technicals and fundamentals are out of fashion.

As The Strategy Session's special guest David Berman of Durban Capital told me after the show yesterday, The Gap's inventory was high coming into the quarter and remains a problem, making it more likely that future numbers could trend downward.

In terms of the technicals, Carter Worth, Chief Market Technician at Oppenheimer Asset Management, saw yesterday’s selloff as confirmation of stock's terrible price action over the past two months.

Going forward, I remain concerned about the company's margins in the wake of widespread discounts. I would not be surprised to see some type of earnings shortfall when the company reports next month.

The key will be the July same-store sales numbers.

Before pulling the trigger, wait on The Gap. It could be just a matter of time before this stock gets marked down.

"The Strategy Session," hosted by David Faber and Gary Kaminsky, airs weekdays at Noon ET on CNBC.

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Gary Kaminsky does not hold any equity positions.

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